Real Estate Development
In PGIM Real Estate Asia Pacific Outlook 2020 report of May 2020, Nguyen, Yip and Chen established that the COVID-19 pandemic brought the Asia Pacific regional economy to a sudden stop in early 2020. Strict travel restrictions and social-distancing measures enforced by countries across the region have been highly disruptive to economic and business activity.
The Asia Pacific Outlook Report 2020 highlighted the fact that most Asia Pacific economies are now facing recession, and at the regional level, the International Monetary Fund expects 2020 to represent the worst output growth recorded in 60 years. The abrupt deterioration of the economic environment has put an end to the long-lasting real estate cycle that started in Asia Pacific in 2010. Prior to the outbreak of COVID-19, the low interest rate environment and positive tenant demand had been supportive to real estate values and rental growth momentum across major markets.
Moreover, The Asia Pacific Outlook Report 2020 found that experience from previous downturns suggests that regional markets are less likely to move in unison, and there is no reason for it to be different this time. The timing and momentum of cycles vary across markets — for both downturns and subsequent upswings — courtesy of diverse economic and real estate fundamentals regionally. All markets in Asia Pacific will be impacted, but severity will vary depending on property types and the pandemic situation in each country. While it is clear that there will be pain and uncertainty in the short term, significant policy responses from governments — notably in China, South Korea and Australia — have gone some way to reassure investors about the outlook.
Just as the downturn is sharp and severe, the recovery that follows will likely be strong. It is in this recovery phase amid all the disruption that VIHK and its global investment partners are ever-ready to help businesses and project developers navigate through the challenges while accurately assessing the conditions, identifying opportunities, and implementing programs.